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Financial Advisor Interview Questions
Top Interview Questions for Financial Advisor
Questions to ask an investment advisor prior to hiring an advisor to ensure that there is an understanding of your financial objectives by the financial advisor.
What services do you offer? Services may include financial planning, investment
management and others.
What size is your firm and how many clients do you have? Practice size, which is indicated by number of employees, assets under management, average portfolio size and number of clients, may affect your relationship.
What is your management style and philosophy? How does the advisor choose investments? How often does the advisor adjust portfolios? Will the advisor prepare a written plan?
How much should I pay a financial advisor?
Fee-based advisors may charge a percentage of assets managed (generally 1-2%) or an hourly or flat fee according to account size and services offered. Note: Fee-based advisors may receive commissions for recommending certain products, such as insurance policies or annuities.
How will I be billed? Typically asset-based fees are billed quarterly and financial planning services are billed by the hour.
Who will I be working with? Will it be the person you are interviewing or with another associate at the firm? Who will manage your portfolio? What contact will you have with that person?
What is your expertise? Advisors often specialize in investment strategies that can include specific investment vehicles such as mutual funds, stocks and bonds, etc., and styles such as Large Cap, Small Cap and International. Explain your preferences to determine the advisor's knowledge about your area of interest.
What has your past performance been with clients who share my investment needs and risk tolerance? While past performance does not guarantee future results, ask to see performance numbers on portfolios similar to yours in both up and down markets. Compare them with relevant benchmarks, such as the S&P 500*, during the same period.
Can you provide me with references? An advisor should be able to give you the names and phone numbers of three current clients. You may also request contact information for professional references such as their banker, lawyer and CPA.
Clarifying your financial needs and preparing comprehensive interview questions can help you select an advisor.
Gather information
Literature, brochures, Web addresses
Ask the advisor to summarize his or her philosophy, style, services, fees, etc.
Form ADV
Ask about the advisor's formal education, professional background, services offered, areas of specialization, compensation and other business practices. Investment advisors registered with the Securities and Exchange Commission (SEC) or state regulatory authorities must provide this information in a two-part document called Form ADV.
For most advisors, Part 1 of this form is available at www.adviserinfo.sec.gov. It describes the advisor's background and business as well as any disciplinary history. Part 2 is a disclosure statement on the advisor's services, business practices, fees and any conflicts of interest. An advisor must provide the information contained in Part 2 either through the form or a brochure entailing comparable information, no later than the time the advisor enters into a contract with a new client.
Prepare for your interviews
Both you and the advisor need to determine how well you can work together. Therefore, you may want to bring more detailed information about your financial situation to your initial meeting, including:
A bottom-line summary of your investable assets. Most advisors have an asset minimum, with many requiring a client to place at least $250,000 under management with them.
Specifics on your investing needs and preferences
- Risk tolerance -How aggressively or cautiously do you want to invest?
- Time horizon -How long do you plan to leave your assets invested?
- Income needs-Do you plan to draw income from your investments?
- Tax situation -Understanding your tax situation will help the advisor minimize the tax consequences of transactions when possible.
- Personal preferences -Are there types of investments you want to avoid, such as tobacco stocks?
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